Tesla has allocated $25 billion in capital expenditures to artificial intelligence and robotics in 2026. The company discontinued production of the Model S and Model X at its Fremont factory in January 2026 to repurpose capacity for manufacturing the Optimus V3 humanoid robot. The Optimus V3 stands 5 feet 8 inches, weighs 125 pounds, and is powered by Tesla’s AI5 chip and xAI’s Grok model, with Tesla having invested $2 billion in xAI. Elon Musk is prioritizing rapid development of robots over a more cautious approach for autonomous taxis. This strategy positions Tesla in direct competition with Boston Dynamics, Figure AI, and other startups in the humanoid robot market.
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